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Is Viral Marketing All It's Cracked up to Be?

Viral marketing is widely touted as the new way to increase market penetration and build brand awareness in the Internet space. Hotmail is a classic example. The success that it and others like it have enjoyed has fostered the belief that viral marketing can be used to build traffic and web site awareness cheaply. Since start-ups are strapped for cash, and there is great pressure to build a customer base rapidly, viral marketing has great appeal. But firms planning to use these techniques must understand what they are giving up.

Viral marketing is widely touted as the new way to increase market penetration and build brand awareness in the Internet space. Hotmail is a classic example — it grew by leaps and bounds by doing something simple.

At the bottom of each email message, there was a small line promoting Hotmail — “Get Your Private, Free Email at http://www.hotmail.com.” The recipient of the message quickly understood that he or she could get an account quickly and easily by visiting Hotmail. This led to phenomenal growth — more than 12 million people signed up in the first year and a half.

The success of Hotmail and others like it led to the belief that viral marketing can be used to build traffic and web site awareness cheaply. Since start-ups are strapped for cash, and there is great pressure to build a customer base rapidly, viral marketing has great appeal.

Viral marketing offers two new insights. First, it envisions a world where marketers can build a customer base at a (nearly) zero acquisition cost. Second, it argues for a move from marketer-to-consumer communication to consumer-to-consumer communication.

Examples of viral marketing are on the rise. Gazooba.com offers “personal recommendation marketing” where individuals can earn incentives by recommending web sites to others. It has become common to provide a “tell a friend” icon next to the description of new products or services. The “Elf Bowling” software designed by NVision Design, Inc. became very famous last holiday season, thanks to large-scale dissemination through email.

There are three reasons for the popularity of viral marketing today.

Entire social networks have migrated to the web. A large proportion of everyone’s friends and family members are now online or soon will be.

Contacting individuals on the web is virtually cost-free. It is possible for one individual to contact hundreds in one day who can contact hundreds more, etc. Pyramids can be built in a day, not years.

The network effect plays an important role: As more people sign up, they can contact many more, and soon the total number rises exponentially.

But is viral marketing really all that it’s cracked up to be? Firms planning to implement viral marketing must understand what they are giving up. I find that there are four key problems with viral marketing.

Brand Control:

The problem with viral marketing is that you have no control over your branding. You don’t know ahead of time whom an individual is going to contact. As a result, many of your messages may end up with people outside the target audience. Moreover, in some cases, individuals may modify the message or add something to it. This leads to variability in how your brand is perceived, something you don’t want.

Uncharted Growth: Viral marketing can lead to unanticipated growth paths. For example, Hotmail is now one of the leading email providers in India. It is not clear if it expected that or even wanted that. However, many individuals started emailing friends in India who emailed many more. Such growth paths may lead to abrupt changes in strategic direction, which can be problematic.

Lack of Measurement: You can’t always track who received the emails and what they did with them. In many cases, it may not be possible to tell if people who adopted your service did so because of your viral marketing technique or otherwise. So it’s difficult to track and measure. Compare this with techniques such as banner advertising, where measurement is now an advanced science.

Spam Threats: Finally, if done poorly, viral marketing can lead to large-scale spam issues. Consider a company that pays individuals to email their friends to convince them to buy one of its products. In this case, the individual who receives the email had only given the friend permission to send email of a personal nature. The one friend’s receiving an unsolicited commercial email can weaken his or her relationship with the person who sent it. This can lead to the recipient of the email dropping a friend and becoming angry with the marketer for sending an unsolicited message. Flames may result, leading to damage to the advertiser’s reputation. In some cases, individuals who want to earn more money simply go out and spam people. This can be problematic for your company image.

Companies planning to implement viral marketing programs must carefully consider these problems and devise plans to overcome them. Certainly, viral marketing must be part of a comprehensive marketing strategy. But relying on viral marketing to do all the marketing grunt-work may be placing too much stock in the latest fad.